Cuts to the CSIRO?

The head of the CSIRO's business and commercialisation arm has warned that a funding cut in next month's federal budget would have long-term detrimental effects on the nation's ability to innovate, compromising opportunities to partner with some of the world's biggest companies.

The country's peak science organisation, the CSIRO generated $37.5 million in licence fees and royalties last financial year and $278.5 million in 2011-12, when royalties from a wireless technology were significantly higher.

Inventions developed at CSIRO range from cotton seeds to contact lenses, with much of the income returned to the organisation's research budget.

However, the general manager of business development and commercialisation, Jan Bingley, said the organisation's capacity to generate income to supplement government funding risked being compromised if the rumoured cuts materialised.

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She also said changes to funding arrangements could undermine the ''open for business'' stance the federal government promoted internationally, with industry partners reluctant to sign on in unstable environments.

On Monday, Fairfax Media revealed the organisation was bracing for a May budget cut of up to $150 million, or more than 20 per cent of its government funding.

Much of the royalties flowing in stem from research projects that began decades ago. Among them is wireless technology, which has produced $420 million in the past five years, and pest-resistant cotton seed varieties used in 95 per cent of Australia's cotton crops. Multinational partners include Bayer and Monsanto as well as local partner Cotton Seed Distributors. Royalties from the cotton seed varieties, developed to be disease and pest-resistant, range between $10 million and $20 million a year.

''A lot of the commercial outcomes we are getting now are based on investment we were able to make in the science using federal government taxpayer money in the past,'' Ms Bingley said. ''If we don't have access to that, then it makes it that much harder to innovate because it's difficult to get industry to pay for things so early on in development.''

She pointed to start-up companies that have emerged as a result of CSIRO inventions, including GeoSLAM, a company commercialising an advanced 3D laser-scanning device called Zebedee. It took 10 years to develop the hand-held scanner, which was recently used to scan Melbourne's Shrine of Remembrance.

Chief executive of BioMelbourne Network, a Victorian industry association for the biotech sector, Michelle Gallaher said much of Australia's success in the field was founded on CSIRO research. She said the organisation grew not only technology but also talent.

It was also helping at least 50 Australian biotech companies to develop and commercialise their research. ''Any kind of cuts to CSIRO will translate to a lack of opportunity down the track,'' she said.